PRS distribution policy rules. Contents

Transcription

1 PRS distribution policy rules Contents INTRODUCTION Scope of document General distribution policy principles Policy review and decision making processes DISTRIBUTION CYCLES AND CONCEPTS Standard distribution cycles and frequency Distribution basis Distribution sections Non-licence revenue Administration recovery rates Donation to the PRS for Music Foundation and Members Benevolent Fund Weightings Points and point values Fixed point values Reconciliation payments Music consumption Distribution section values Unnotified works Exclusions Adjustments Shares Recognition and application of publishing contracts Infringements, disputes and counter claims BROADCAST REVENUE Key concepts Broadcast sampling Time of day weighting BBC blanket licence platform revenue splits Distribution basis summary Unmatchables and carry forwards Public reception Introduction Royalty source... 30

2 Distribution policy Processing policy Other notes BBC radio Introduction Royalty source Distribution policy Processing policy Other notes Commercial radio Introduction Royalty source Distribution policy Processing policy Other notes BBC TV Introduction Royalty source Distribution policy Processing policy Other notes ITV Introduction Royalty source Distribution policy Processing policy Other notes BSkyB Introduction Royalty source Distribution policy Processing policy Other notes Channel Introduction Royalty source Distribution policy

3 Processing policy Other notes Channel Introduction Royalty source Distribution policy Processing policy Other notes Discovery Introduction Royalty source Distribution policy Processing policy Other notes Turner Introduction Royalty source Distribution policy Processing policy Other notes MTV Introduction Royalty source Distribution policy Processing policy Other notes PBS America Introduction Royalty source Distribution policy Processing policy Other notes B4U Introduction Royalty source Distribution policy Processing policy

4 Other notes BT Sport Introduction Royalty source Distribution policy Processing policy Other notes Fox Television Introduction Royalty source Distribution policy Processing policy Other notes The Box Plus Network Introduction Royalty source Distribution policy Processing policy Other notes UKTV Introduction Royalty source Distribution policy Processing policy Other notes CBS/AMC Network Introduction Royalty source Distribution policy Processing policy Other notes NBC Universal Introduction Royalty source Distribution policy Processing policy Other notes

5 Walt Disney Co Introduction Royalty source Distribution policy Processing policy Other notes Other TV stations/channels Introduction Royalty source Distribution policy Processing policy Other notes Educational Recording Agency Introduction Royalty source Distribution policy Processing policy Other notes PUBLIC PERFORMANCE REVENUE Key concepts Distribution basis Unmatchables and carry forwards for live events Pop concerts Introduction Royalty source Distribution policy Processing policy Other notes Classical concerts Introduction Royalty source Distribution policy Processing policy Other notes DJ events Introduction Royalty source

6 Distribution policy Processing policy Other notes General live Introduction Royalty source Distribution policy Processing policy Other notes Gigs and clubs scheme Introduction Royalty source Distribution policy Processing policy Other notes Cinema Introduction Royalty source Distribution policy Processing policy Other notes General recorded pubs Introduction Royalty source Distribution policy Processing policy General recorded shops Royalty source Distribution policy Other notes General recorded restaurants Royalty source Distribution policy General recorded jukebox Introduction Royalty source Distribution policy

7 General recorded karaoke Introduction Royalty source Distribution policy Other notes General recorded South Asian restaurants Royalty source Distribution policy Processing policy Other notes General recorded other Introduction Royalty source Distribution policy General recorded aerobics Introduction Royalty source Distribution policy Other notes General recorded shops at Christmas Introduction Royalty source Distribution policy General recorded Welsh language analogy Introduction Royalty source Distribution policy Processing policy Background music system suppliers Introduction Royalty source Distribution policy Processing policy Other notes Sports stadiums Introduction Royalty source

8 Distribution policy Processing policy UK airlines Introduction Royalty source Distribution policy Processing policy Other notes UK churches Introduction Royalty source Distribution policy Processing policy UK schools Introduction Royalty source Distribution policy Processing policy ONLINE REVENUE Key concepts Unmatchables and carry forwards itunes album/single downloads Introduction Royalty source Distribution policy Processing policy YouTube Introduction Royalty source Distribution policy Processing policy Other notes Spotify Introduction Royalty source Distribution policy Processing policy

9 GEOL within broadcast blanket Introduction Royalty source Distribution policy Processing policy Other notes Blanket GEOL standalone licences Introduction Royalty source Distribution policy Processing policy Other notes Cloud locker services Introduction Royalty source Distribution policy Processing policy Other notes BBC iplayer Introduction Royalty source Distribution policy Processing policy Other notes Pan European transactional licences Introduction Royalty source Distribution policy Processing policy Limited Online Music Licence Introduction Royalty source Distribution policy Processing policy Online karaoke services Introduction Royalty source

10 Distribution policy Processing policy Other notes Business to business music suppliers (MSB2B) Introduction Royalty source Distribution policy Processing policy Other notes Apple Music Festival Introduction Royalty source Distribution policy Processing policy Other notes Performing right online Introduction Royalty source Distribution policy Processing policy OVERSEAS REVENUE Key concepts Unmatchables and carry forwards Revenue received from affiliate societies Introduction Royalty source Distribution policy Processing policy Retransmission revenue Introduction Royalty source Distribution policy Processing policy Other notes Revenue collected in PRS agency territories Introduction Royalty source

11 Distribution policy Processing policy Other notes APPENDIX Standard distribution cycle Broadcast sampling rates How we distribute UK Radio services as of October How we distribute UK TV stations as of October Public performance tariffs as of October PRS processing rules for royalties received from affiliate societies PRS Admin. Recovery Rates for distributions made from October GLOSSARY

12 INTRODUCTION Scope of document This document provides an overview of the policies and methods employed by the Performing Right Society (PRS) in making performing right distributions. Unless otherwise indicated, all policies, rates and information are valid as of June Not every aspect of the PRS distribution process will be covered within this document. PRS members should contact the member services department at or for more information, while affiliated collecting societies should contact General distribution policy principles The general policy and structure for the PRS distributions process is found in the PRS Constitution, specifically Rule 2 of the PRS Rules and Regulations ( Rules ). To the extent that we are legally obligated, this is to reflect CRM Regulations. Responsibility for determining the methods by which PRS revenue is allocated and distributed rests with the PRS Board of Directors as outlined in Rule 2 of the Society s Rules. The board has delegated practical oversight of this responsibility to the Distribution Committee, a sub-committee of the PRS Board whose decisions concerning distributions are made with the intent and purpose of achieving a fair, equitable and cost-effective distribution of the income collected by PRS to its members and the members of its affiliated societies. PRS also aims to ensure that all aspects of its distribution policies and processes are transparent and easily understood, with clear cost allocations and without any unknown or hidden cross-subsidies. PRS requires usage data to identify which works have been used, and therefore which rights-holders to pay. In some cases, licensees are not able to provide complete music usage data or supply it in a format that PRS can process. Therefore a variety of data collection methods are employed, including the use of music recognition technology companies and electronic fingerprinting techniques. The collection and processing of such data can be very expensive. In many instances, the principles of fairness, accuracy, cost effectiveness and transparency are opposing forces. For example, in some situations it might cost more to achieve 100% data accuracy and process details of every individual performance than the total revenue actually collected. In such cases, cost effective methods of data collection and analysis are developed to provide statistically representative information about music use. The distribution committee ensures a balance between these principles to provide the greatest value to all rights-holders represented by PRS. Royalties for members of affiliated societies are calculated in every respect on the same basis as allocations to PRS members. 12

13 The board endeavours as far as possible to comply with Binding Resolutions of the International Confederation of Societies of Authors & Composers (CISAC) related to principles governing the fair and equitable distribution of royalties. Policy review and decision making processes The PRS Board is responsible for the formulation and implementation of specific distribution policy and is required (a) to ensure that such policy is fair, accurate, transparent and cost effective; and (b) to put in place a system to ensure that the data used to support the allocation of royalties is, and continues to be, based on statistically reliable sources that fairly represent the performing right usage of musical works in the UK. PRS distribution policies are subject to regular review. PRS management works closely with the distribution committee to ensure that policies which have been identified as being in need of review are subject to thorough and timely examination. There are a number of different factors which could lead to a policy review, including the following: A change in the terms of the licence(s) granted in respect of the performances distributed under a certain policy A change in the cost or availability of data used to distribute revenue on a certain section, such as technical changes Member dissatisfaction with current policy A new form of licensed repertoire exploitation A change of legislation One or more of the factors above could lead to a review of policy and reviews will be prioritised based upon a number of factors including: Value of distributions governed by the policy The estimated potential benefit of a review, such as increases in accuracy or cost efficiency Potential risks of not reviewing current policy, such as the absence of a distribution policy for a new revenue stream During a policy review, management will work closely with the distribution committee to determine a means of distribution that is considered fair, accurate and cost effective, and that is as clear and straightforward as possible. In order to do this, PRS management will undertake extensive analysis to fully understand the potential impacts of any proposed policy change on members earnings and on other rights-holders represented by PRS. 13

14 DISTRIBUTION CYCLES AND CONCEPTS Standard distribution cycles and frequency PRS distributions are normally made four times a year, in April, July, October and December. In most cases, the distribution occurs one quarter after the end of the quarterly performance period. The distribution cycles for most, but not all, major revenue sources are shown below: For television (except music TV channels): Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec July Distribution Oct Distribution Dec Distribution April Distribution For music TV channels, radio, all public performance (except concerts) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec July Distribution Oct Distribution Dec Distribution April Distribution Distribution information for other revenue sources is shown in the appendix, under the heading Standard distribution cycle. The December and April TV distributions are referred to as quarterly distributions even though they span two and four months respectively. Minimum total payment thresholds of 30 (for members in the UK), 60 (for members outside the UK) and 100 (for affiliated societies) apply at the main four distributions except the December distribution. Payments of less than these are held until either they reach that total. In the December distribution each year the threshold for members in the UK is reduced down to 1. Thresholds for socalled mini-distributions vary on an individual basis. Distribution basis PRS bases distributions on the following methods, in order of preference: Census This is the preferred basis for all distribution sections. A census distribution involves data collection, processing and payment for every single performance, often referred to as pay-per-play, within the licence period. Unfortunately it is not always feasible for PRS to distribute on a census basis, due to the nature and volume of music usage by some licensees. Usually, this is where no cost effective solution for collecting and processing data is available, for example music played in the background by licensed pubs. Sample Where census distribution is not feasible, PRS seeks to collect a representative sample of actual performances as the basis to distribute total section revenue. This method is effective when (a) music usage is highly repetitive or there is a small breadth of total repertoire used and (b) PRS can collect statistically relevant sample information cost effectively. Sampling is not an appropriate distribution basis if data collection is expensive and there is a very high volume of music usage. For example, it would not be cost effective to collect a sample of background music played in pubs that is statistically representative. 14

15 Analogy An analogy based payment is used for any distribution section where census and sample methods are not feasible. This is usually because sufficient data is not readily available. The analogy method uses a similar, or analogous, data set as the basis for revenue distribution. Analogy is most frequently used for general public performance of non-featured recorded music, and is described in the Public performance section under Distribution policy headings later in this document. In some instances, combinations of these approaches may be used. Note that if and where a licensee fails to supply usage data at the correct time to enable PRS to make a distribution from out of the royalties received from that licensee, PRS will hold the royalty revenue until such time as we have obtained the relevant data. If, after having taken reasonable steps to do so, PRS is still unable to obtain the data from the licensee, PRS reserves the right to distribute the revenue over analogous data. Distribution sections A distribution section is a pool of revenues that have been collected from one or more sources and distributed together because they are related in some way. For example, the live performance section may cover music performed live in different sorts of venues, such as hotels, pubs or concert halls. These venues may have different licensing tariffs but are pooled together for distribution purposes because they all cover live music use. A distribution may contain hundreds of individual distribution sections which are identified separately on distribution statements. Non-licence revenue Non-licence revenue (NLR) is the interest earned on investments and royalties awaiting distribution. It is apportioned between rights-holders in direct proportion to their earnings and, when there is sufficient available, is distributed in July and December as a stand-alone distribution section. NLR is used to pay donations to the PRS for Music Foundation and Members Benevolent Fund, but is only taken from the portion due to PRS members, not from other rights-holders. Administration recovery rates PRS recovers its operating costs from the revenue it collects. The amounts deducted vary by source because some sources cost more to operate than others. This is reflected in the administration recovery rates, also known as admin rates. The admin rates not only have to cover the cost of collecting and processing usage data but also the general costs necessary for the society to operate effectively. These general costs include such things as maintaining a database of copyright information about musical works, negotiating and issuing licences, etc. Admin rates, which are reviewed regularly, are made at gross licence fee level to leave a net distributable revenue, which is then used in subsequent royalty calculations. A list of the current admin rates can be found in the Appendix. 15

16 Donation to the PRS for Music Foundation and Members Benevolent Fund PRS makes an annual donation of 1.5m to the PRS for Music Foundation, the UK s leading funder of new music across all genres. PRS also makes an annual donation of 25,000 to the PRS for Music Members Benevolent Fund. Both of these sums are taken from the portion of NLR due to PRS members; none is taken from the portion of NLR due to other rights-holders. Weightings Generally, PRS follows a music is music approach to distributions. No weighting is applied within a distribution section because of the music s source, its genre, its place of origin, its purpose, its instrumentation or the way in which it is used. Therefore, all individual music usages within a single distribution section for a given period have the same value. Usually this means that all music use from a particular source, for the same period, is paid at the same rate. However, PRS has time of day weightings on TV broadcast distributions, where usage is either primetime or non-primetime to take the size of audience into account. These are split out into separate distribution sections as they each have their own usage values. Points and point values When PRS for Music agrees a blanket licence fee there is no pre-defined value per usage set in the licence, it is a lump sum. As such, there is no pre-set value to base the distribution of each performance on, and so this value per usage needs to be calculated. PRS does this by allocating a number of points to each usage. A point represents a different value depending on the distribution section. For example, for radio and TV broadcasts the point is a minute of time, so a broadcast lasting three minutes 30 seconds becomes 3.5 points. For public performance the value might be, for example, the number of times a work is performed in a disco, so a work appearing 10 times in a disco would have 10 points. Within each distribution section, the total points for each work are added up. Works that have more usages therefore accumulate more points. Each point within a distribution section will have the same value. Therefore works that have accumulated more points will receive more money. Example: Every minute of music broadcast on Radio Station X receives one point. Work A has two broadcasts of three minutes so receives 2x3=6 points Work B has one broadcast of three minutes so receives 1x3=3 points Work C has 20 broadcasts of two minutes so receives 20x2=40 points 16

17 Each point on Radio Station X is worth 0.50 (the point value for this distribution section) Work A receives 6x 0.50 = 3.00 Work B receives 3x 0.50 = 1.50 Work C receives 40x 0.50= Point values are calculated per distribution section, based on the available revenue for inclusion divided by the total points of all the usages being distributed. For example, a section with 10,000 available for distribution and a total of 20,000 points would give a point value of This point value is used to credit each work at the distribution, so a work with 3.5 points in this section would receive 3.5 times 0.50 = Music use often fluctuates throughout the year, causing the point value to fluctuate too. For example: Period Total Total Points Point Value Q1 1, Q2 1, Q3 1, Q4 1, Fixed point values are used to reduce such fluctuations. A history of the recent point values and fixed point values used by PRS can be found on Fixed point values Many distribution sections are paid using fixed point values (FPVs). These represent the value of a single unit of music usage for that distribution section, and mean that music can be valued equally throughout the period. In its simplest form an FPV will be calculated as follows: Broadcast: Total annual station distributable revenue total annual station music minutes Public performance: Total annual section distributable revenue total performances in section The reality is usually more complicated. When an FPV is set for the first distribution in a licence period, the final year s revenue and music use is not known. Predicting final revenue and usage incorrectly at the first distribution is an inherent risk. The wrong forecast could mean that more revenue is distributed than actually collected. To minimise the risk of over distribution, PRS cautiously under forecasts the annual net revenue when making this calculation. Any residual revenues left over after the last standard distribution for a licensed period are distributed via a reconciliation payment. 17

18 Reconciliation payments PRS aims to distribute all revenues collected in a licence year, covering performances falling within the licence period 1, in the final quarterly distribution. Where this is not possible, the next available distribution is used. If sufficient residual revenue remains after PRS has made all distributions for the licence period covered by a specific fee per section, it will be distributed as a reconciliation payment. This payment pro-rates the residual revenue across all members featuring in the original distributions in proportion to the value generated by their performances. Example: The distribution section for Licensee A, a music TV broadcaster, has net distributable revenue of 1,000, covering all 2010 music usage. Initial distributions for the performances logged in the 2010 period are made in July 2010 for quarter one performances, October 2010 for quarter two performances, December 2010 for quarter three performances and April 2011 for quarter four performances. These initial distributions total 900, leaving residual distributable revenue of 100. Member A initially earned 100 of the original 900, or 11%. Then, upon reconciliation, Member A will receive an additional reconciliation payment of 11, which is 11% of the 100 residual revenue. Therefore, Member A will receive 111 in total. Where the residual revenue is insufficient to warrant reconciliation across the original usage, it is carried forward to the next year s distribution pool for that section. Music consumption For distribution purposes, music consumption is a measure of audience hours containing music which is used predominantly in TV or radio broadcast revenue apportionment calculations. It is usually calculated at station level by multiplying total audience hours by music percentage, which is total music hours divided by total broadcast hours. This provides a consistent and meaningful basis to compare different online services, TV and radio stations for a single licensee, and the relative importance and value of music within that licensee s usage. 1 There are two exceptions to this: a. Commercial radio: The commercial radio licence year runs from October to September, so the final performance period in any given licence year is July to September, paid in the December distribution. Due to the time constraints associated with the December distribution, it is not possible to include the reconciliation within the final payment. This reconciliation therefore takes place in April, the next available distribution. b. Reserved revenue in respect of missing data: The only other scenario in which revenues are not reconciled at this distribution is where substantial gaps in performance data have been identified. In this case, revenue is only reconciled when outstanding data is received. 18

19 Distribution section values The exact values of some distribution sections can vary significantly from year to year. In some instances the licence details, including the licence fee, are contractually confidential between PRS for Music and the licensee. Because of this no revenue total values are given in this document. Unnotified works In most instances PRS matches usage to works and distributes royalties in accordance with works registration details which have been notified by members and/or affiliated societies. However, in some instances the work details matched to have not been formally registered by anyone. For example, they may have been compiled from various performance usage returns. Such works are referred to as Unnotified works. Since April 2013 where PRS has identified that any particular British publisher might have an interest in an unnotified work it has paid 50% to the writers but has withheld the other 50% potential publisher share from distribution. The held share will be released once the work has been formally registered. For non-uk works PRS will only withhold the publisher share where it has identified a particular potential sub-publisher. In practice this means that if PRS is only able to identify one interested party and that interested party is a member of an affiliated society then PRS will pay the money to that society. This is in line with CISAC s binding professional rule CTR R1 (pertaining to Insufficient Documentation). Note that such payments are not specifically marked with the Warsaw Rule indicator on distribution statements although they are marked as unregistered works. At present royalties are held and therefore claimable for 3 years from the date of intended distribution. In November 2014 the distribution committee decided that money remaining after 3 years should be paid to the identified writers or their foreign affiliated society. For online usage, no royalties are held and PRS pays the publishers it has identified as well as the writers. This policy was agreed by the distribution committee in November 2012, reconfirmed by it in March 2013, and later approved by members at the 2015 AGM. This brought us into line with CRM Regulations. How PRS generally treats usage which is unmatchable is described in section 3.6 of this document. Any exceptions to this are mentioned in appropriate sections elsewhere in this document. PRS undertakes several stages of matching. This includes using unique identifiers, titles, interested parties and production details to automate usage matching. There is also a dedicated team who, subject to thresholds mentioned individually elsewhere in this document, manually match reporting which has not automatched to ensure the greatest proportion of matched usage is achieved. 19

20 Exclusions The following is a non-exhaustive list of exclusions to our normal distribution process. PRS does not distribute fees in certain circumstances including, but not limited to, the following: Rights reserved to members generally: live performances and broadcasts of complete Dramatico-Musical Works; live performances and broadcasts of excerpts of Dramatico-Musical Works performed dramatically. Non-dramatically performed excerpts from dramaticomusical works are licensed by PRS provided that the duration of the excerpts does not exceed certain thresholds; live performances and broadcasts in whole or in part of any music composed or used for a Ballet, if accompanied by a visual representation of that Ballet; performances of music specially written for a dramatic work, such as incidental music to a play, when performed in, or in conjunction with that dramatic work; and performances of music written specially for Son et Lumiere productions when performed as part of those productions. For all of the points above, there are certain circumstances where PRS does control and distribute royalties from television broadcasts and public performances of them by means of televisions and radios. Rights excluded at the request of individual members: PRS does not distribute to the individual member for any use of their work in circumstances where in respect of that work: PRS has declined to license the rights in the member s work under its Article 7(f) procedure, which might include: o o o pre-existing works used in compilation shows or theatrical productions such as plays; dramatic performances of Music Theatre or Cantata Musicals; specially written music accompanying silent films; PRS has assigned to the member the right to perform the work live and in public under its Article 7(g) procedure; The member has requested and PRS has authorised grant of a non-exclusive licence for non-commercial uses of the work; and The member has excluded one or more categories of their rights under Article 7(cA), in respect of that category. Rights for which PRS chooses not to make a charge for the use in question, including: performances during Divine Worship in churches or other places of worship (click here for more info); and performances to patients in hospitals (click here for more info), nursing homes (click here for more info) and other similar establishments; For more information on Discretionary Charging Policies (DCPs), click here 20

21 Rights not controlled by PRS (e.g. because at the time of the performance ownership or control thereof has not been vested in PRS by the Member or affiliate. Exclusions by law: performances deemed not to have taken place in public under the Copyright, Designs and Patents Act 1988, such as performances given for the purpose of instruction at schools; and performances of works that are in the public domain. For further detail about the above exclusions, please contact or Adjustments Rule 2(i) (i) says that distributions shall be final and binding, save in respect of any valid claims made by the persons interested within a period of three years from the date of the distribution concerned. The practical policy application of this rule is that if a Member or other affiliated society claims to be entitled under the PRS distribution policy a distribution in respect of a performance and/or claims not to have received a distribution to which believed to have been entitled under such policy within 3 years of the date of the distribution, PRS will pay the claimant the sum concerned, usually by mean of supplementary payment at the next main quarterly distribution. Note that this does not mean that PRS will only make adjustments for up to three years. In some instances it may take considerable time before an adjustment can be agreed and authorised but as long as the initial claim for the adjustment was made within three years of the date of distribution, PRS will then make the adjustment. PRS will also make adjustments in respect of incorrect payments for so-called unnotified works if requested and the claim for adjustment is made within 3 years of the date of the distribution and the work had been (or could have been) notified prior to the distribution with different details. PRS will only honour valid claims where the claimant would have been entitled to receive the payment claimed at the time of the original distribution. For example, PRS will not make adjustments because of back-dated contracts, for example if a work (notified or unnotified) is distributed as unpublished and subsequently a publisher acquires the work under a contract that grants control from earlier than the distribution PRS will not make an adjustment because at the time it actually made the distribution the terms of the contract were not operative. Shares After it has deducted its administration expenses from royalties collected, PRS begins the process of allocating the net fees amongst the persons interested in the works exploited under its licences (Rule 2(c)). The Allocation of Shares is how PRS divides royalties due to a work between the parties interested in that work, i.e. amongst the member and/or affiliated society 21

22 and/or other right holder entitled to participate in the relevant share of the net fee attributed to the use of the work. If and where the Board is unable reasonably to determine the identity of the person interested because the share in question is disputed by two or more persons claiming to be interested or otherwise entitled to the royalties, the fees will be dealt with under PRS rules governing Disputes and Duplicate Claims and related policies (as described further below). As and when required by PRS each member must notify PRS of the allocation of shares (or, division of fees ) and the full names of all interested parties, in sufficient detail, of each musical work in which they have an interest. PRS will accept such notifications in respect of active works from affiliated societies when received from societies in the customary manner, e.g. fiche international etc. PRS will usually divide the royalties between the parties involved in the work in the proportions agreed between them subject to the following: The PRS writer s share is the share of monies allocated by PRS to the writer(s) of a work (or where the writer(s) is/are a member of an affiliated society, to that society). A member s right to an allocation of the writer s share under the Rules arises by virtue of his or her authorship of the work to which the distribution relates and regardless of whether or not the writer is entitled to retain that sum under the terms of his/or her contract (if any) with the publisher(s) and/or rightsholder(s) of the work). Where a work has been written by a member of PRS or one of its affiliates, PRS will not allocate more than 50% of the fee to be distributed in respect of a work to the publisher(s) of the work. However, in accordance with Rule 2 (gc) (i), if and where there is no writer member interest in the work, then PRS will pay the notional writer share to the publishermember). There is no inherent publisher share; a publisher share will only be allocated to a person claiming to be a publisher provided that it is the publisher of the work concerned according to PRS Rule 1(o). Unless it has evidence or claims to the contrary, PRS will assume that publishers do meet the Society s official definition of being a publisher as defined in the Society s formal rules. In certain circumstances the share allocated to a publisher will be limited to 16.67% (see Rule 2(f)(ii) in the Rules). Unless it has evidence or claims to the contrary, PRS will assume that publishers do meet the requirements of Rule 2(f)(ii) and so will not automatically limit the publisher share to 16.67%. In the absence of any registered details to the contrary, PRS will allocate 50% of the total to the composers of the music and 50% to the authors of the original lyrics of unpublished works. Where an unregistered work is identified as having a publisher PRS will assume, in the absence of registered contract information, the split is 50% to the writer and 50% to the publisher. Arrangements For performances of an arrangement of a copyright musical work, PRS will not usually allocate a share to the arranger unless otherwise agreed by all the interested parties. In the absence of any such agreement 22

23 performances of such an arrangement will be credited to the persons interested in the original copyright work. When it does allocate a share to an arranger of a copyright work that share will not be more than % (2/12th) unless the arranger is a member of one of the American societies, BMI or ASCAP, in which case the arranger share will be 12.5% (1/8th). For performances of a copyright arrangement of an otherwise noncopyright work PRS will credit the arranger as if he/she was the composer of an original composition. Samples Samples are distributed as registered but are subject to the rules about writer/publisher share splits outlined above. Translations of Lyrics and Addition of Amended or Substituted Lyrics Where an authorised translation of copyright lyrics is made, or lyrics are changed or substituted with the authority of the copyright owner, the share allocated to the Translator/Sub-Lyricist is 16.67% (or 12.5% if the Translator/Sub-Lyricist is American). This share is deducted from the shares of the composers and original lyricists in proportion. e.g.: Original Work Translated Work Translated Work (American) Composer 25% 16.67% 18.75% Author 25% 16.67% 18.75% Translator % 12.5% Original Publisher Sub Publisher 50% 50% 50% Where the original lyrics are non-copyright, translated or Substituted lyrics are treated as if they were original copyright lyrics, e.g.: Original Work Translated Work Composer 50% 25% Author - - Translator - 25% Publisher 50% 50% In all other cases no share is provided for the translated, substituted, parodied or otherwise changed lyrics and the original work is credited. In line with the CISAC s recommendation known as the Amalfi Resolution, PRS will only credit sub-lyric versions where either: it is known that the sub-lyric version has been performed or there is genuine doubt about which version or there is an instrumental performance under the title of the sublyric version. Vocal or instrumental All performances, whether instrumental or vocal, of works originally written as vocal works are deemed to be performances of both the words and the music. However where words have been written for a pre-existing 23

24 instrumental work, the words are not deemed to have been performed for instrumental performances Non-member shares Where a non-member interest is controlled directly by a PRS publisher member the share due to that non-member is paid to that publisher. Directly means the agreement has no intermediaries between the nonmember and the PRS publisher member. Where the PRS publisher member is the original publisher, we will distribute the non-member share to the PRS publisher member Shares are allocated to non-member interests of works originating in certain overseas territories where the share allocated for the non-member is paid to the territory s society. This is only done in respect of those societies that in theory also operate in this way reciprocally with PRS. In all other cases no share is payable in respect of non-member interests. This is achieved in one of two ways: For concerts, and other straight-lined distribution sections no share is attributable in respect the non-member interest, e.g. Composer 1 (member) 50% Publisher (of Composer 1) 50% Composer 2 (non-member) Nil For all other distribution sections a share is nominally attributable in respect the non-member interest but this is credited to a special account (known as the 97 account) that redistributes the share to all participants in the distribution section: Composer 1 (member) 25% Publisher (of Composer 1) 25% Composer 2 (non-member) 50% (paid to the 97 account) Recognition and application of publishing contracts When making most distributions PRS applies officially documented contracts applicable at the mid point of the previous quarter to generate the payable owner e.g.: Publisher gains control of works First Distribution affected Performance period covered by dist July 2013 Dec 2013 Dependent on licence Sept 2013 April 2014 Dependent on licence Online - transactional (i.e. IMPEL) and some others do not follow this pattern. The payable owner is generated at point of invoicing, normally close after the sale period and then paid at a subsequent distribution (once the money has been received). 24

25 Infringements, disputes and counter claims Although these are not strictly distribution policy matters it is worth noting that PRS has formal procedures for dealing with infringements, disputes and counter claims. These policies cover where PRS is entitled to hold on to distributable funds until such time as the matters are resolved. Disputes and Duplicate Claims Details of the PRS disputes and counter claims policy can be found here: ndduplicateclaims/pages/disputesandduplicateclaims.aspx Samples Details of the PRS sampling disputes policy can be found here: rning%20samples%20june% pdf Infringements Details of the PRS infringements policy can be found here: entsanddisputes/pages/infringements.aspx 25

26 BROADCAST REVENUE Key concepts Please note the following concepts which help ensure the way we distribute revenue to members is fair, accurate and transparent. Commercial licensee blanket revenues that cover more than one radio or TV station are divided between the stations using a two step process. Each station is allocated a fixed minimum amount per station. Any remaining money is divided between the stations in proportion to their relative music consumption. Works performed on broadcast sections are paid based on their total duration on that service multiplied by the calculated FPV for that service for that period. No distinctions are made between music used in programmes, commercials, station/channel idents, jingles or trailers. All audiovisual broadcasts are subject to time of day weightings and feature in separate distribution sections. PRS makes no distinction in licensing or distribution terms between traditional terrestrial broadcasters and cable or satellite broadcasters that it licenses directly. (Retransmissions of such services in other countries are licensed by local societies and are subject to different administration recovery rates) In a few instances, where PRS has licensed foreign language services broadcast from the UK but targeted at non-english speaking countries, e.g. Phoenix TV and Japan TV, PRS simply passes the licence revenue to the relevant sister society to distribute as they are better placed to identify the repertoire used. Broadcast sampling PRS aims for a census or pay-per-play based distribution. PRS only uses sample data where it is not cost effective or feasible to obtain and process full census information. In these instances, PRS sets sample rates for each station on the basis of the distributable revenue collected and cost incurred collecting and processing usage for that revenue. So a high value station with reasonable quality data will be asked for a larger sample set than a low value station, where the data is more costly to process. The sample rate is set with a minimum sample of four days per annum. It is not cost effective to process any data for services with extremely low revenue, such as very small local radio services or student radio services. Once a sample rate has been established, days are pro-rated across the four distributions, which take place annually, and selected at random from within each period. All logs from performances on a sample day will be collected and processed. 26

27 For many sampled stations the sample is augmented by using Soundmouse sound recognition to create a virtual census. This does not happen in respect of advertising which remains sampled. For radio stations where the revenue is less than 5,000 per annum no data is processed and an analogy is used. Time of day weighting Following a PRS and MCPS Board decision in 2006, all TV broadcast performances from 2007 onwards have been subject to time of day weightings to reflect the likely size of the audience for each usage. These weightings dictate that one minute of music broadcast during primetime hours is worth twice as much as one minute broadcast outside primetime. Since 2008, primetime hours have been 6pm to 11pm. Productions which straddle the border between primetime and non-primetime are classified on the basis of the time slot into which their mid-point falls. For example, all music used in a one hour long production whose broadcast commenced at 5.45pm would be paid at the primetime rate as the production s mid-point, 6.15pm, falls within the defined primetime slot. BBC blanket licence platform revenue splits The BBC is the UK s only significant publicly-funded public service broadcaster. It is also the only major UK broadcaster licensed for a single fee that covers music used on a number of national, local and regional radio and TV stations. The most recent BBC licence agreement provides a single annual fee covering all music used in its public service output from April 2011 onwards, for both PRS and MCPS. This revenue is split between audiovisual and radio output. Services are classed as audiovisual or radio depending on how they are branded, irrespective of their method of delivery. For example, BBC2 is considered the same audiovisual channel whether it is received on terrestrial TV, satellite TV or online. Similarly, Radio 3 is considered a radio station whether received by traditional radio broadcast, DAB digital radio or directly streamed from the BBC s website. Calculating the splits Firstly, 50% of the overall blanket fee is split between TV and radio based on the amount of music each platform uses, regardless of audience. The remaining 50% is apportioned in relation to each platform s music consumption, which assesses both audience share and music use. The BBC s audiovisual channels have significantly more audience hours than its radio stations, but its radio services use significantly more music than TV does. As a result, the split varies year on year as audiences and music use fluctuate. 27

28 Having split the single fee between audiovisual and radio, the allocation for each has to be sub-divided between PRS and MCPS. Details of these splits are given later in this document under headings BBC radio and BBC TV. This methodology was agreed by the distribution committee in May 2011 and subsequently ratified by the PRS and MCPS Board in June BBC Worldwide This is the commercial arm of the BBC and its activities are not covered by the main BBC blanket licence. There is a separate licence for which the fee has to be split between MCPS and PRS. This licence includes the provision of BBC channels to the Republic of Ireland on the BSKYB platform. This particular element is a performing element only. The remainder of the fee is divided equally between the two societies in accordance with the standard practice for broadcast licences. This was agreed by the Distribution Committee in May 2012 Distribution basis summary A summary of the basis of broadcast distributions as of October 2011 is shown below: Basis Revenue Census 90% Sample 9% Analogy 1% Unmatchables and carry forwards PRS uses its best efforts to identify all works appearing in its distribution analysis. The term unmatchable usage is used to indicate where a licensee has reported use of music but PRS or MCPS has been unable to match it to a work, whether registered or unregistered, or to identify the interested parties as members of a collecting society. The usage is therefore found to be unmatchable and is marked with a CUP code, which stands for Combined Undistributable Performances. Certain categories of CUP coded usages, which might be identified by members or other rights-holders, are listed in the unidentified performance list on the PRS for Music website: Included on the unidentified performance list: Usage with interested parties identified as non-members Unpayable arrangements of public domain works Insufficient information or unidentifiable usage Not included (as no rights are payable): Sound effects or speech Grand rights - performance not to be paid Public domain works or traditional works Usages usually appear on the unidentified performances list one calendar month after each distribution. During this month, PRS reviews the unmatchable usages 28